Tax Cuts Are Coming To Missouri. What’s Next?

(St. Charles, MO) – Republicans in the State Legislature wanted it, Governor Nixon said “no” and then lawmakers did it anyway.

Like it or not, the wheels are in motion for an across-the-board tax cut for individuals, families and businesses in Missouri. That is the result of the Legislature’s override of a Nixon veto of that plan.

Some estimates put the tax cuts around $600 million and opponents say over $200 million of that cost could impact public schools. Supporters think tax revenue collections will actually increase as a result of increased economic activity and sales tax collections that come from a more business-friendly approach to policy.

On “Missouri Viewpoints”, former Democratic State Representative Gary Sharpe warned about what he believes will be the impact on state government and, as a result, many Missourians.

“Missouri is one of the low tax states in the nation at the present time and their network of state services, their safety net, is really being stretched extremely tight at the present time.”

Missouri Republican Chairman Ed Martin calls the push for tax cuts both a philosophical issue and an opportunity to make government better.

“People and businesses can do better with their money than government can. This is a sort of distinct debate between the more liberal party, the Democratic Party, and the Republican Party.”

Martin thinks the issue is economic but also a matter of keeping government lean and focused.

“You don’t have to go very far to see inefficiency, ineffective and, maybe more important, priorities that are off base [in government]. I would actually submit to you that in a tough economy, I think what we need to do is examine our priorities.”

Sharpe, who is now the president of Missouri Public School Advocates isn’t buying the economic arguments and doesn’t believe the tax cuts are a priority for Missourians in the first place.

“I’ve never had anybody on the street or otherwise come up and say ‘You know, I just really have to have a state tax cut.”

He says if the state reduces funding to local public schools or does not keep up with increased costs at the local level, local districts may turn to higher property taxes to make up the difference.

The cuts are set to start phasing into place in 2017 and will do so over five years. Tax revenue collections will have to hit specific benchmarks for the phases to continue. Republicans, including Martin, see this as a safety net for state coffers and a way to boost the state’s economy.

“We know the economy is helped, it is spurred, by more money being spent by people whether it’s buying clothes and food or buying other stuff, whatever it is. It’s spurred by that and we need to get something going in Missouri.”

While Sharpe disagrees with the economic theory, he wants lawmakers to look for ways to shore up what he fears will be net losses to the state and, as a result, to education and social services.

The next round of discussion, in his view, should include reforming the tax credit system.

“Not all tax credits are bad but a lot of those tax credits are for people who don’t need them and it’s unfair to other business people.”

Criticisms of the size and scope of tax credits in the state have come from both sides of the political aisle in recent years.